The most elementary pricing method is to add a standard markup to the products cost. For example, construction companies give job Birds by giving an estimate of the cost and adding a markup for profits.

Suppose a printer manufacturer has following costs and sales expectations:

Variable cost per unit: $15

Fixed cost: $300,000

Expected unit sales: 30,000

(1) unit cost ______?

Unit cost = variable cost per unit + (fixed cost/ unit sales)

(2) Markup price? __________

If the printer manufacturer wants to earn a 50 percent markup ok sales, its markup price?

Markup price = Unit cost/ (1-markup)

The manufacturer will charge dealers

(3) $______ per printer and make a profit of

(4) $______ per unit

(5) target return price? $______

In target returning price, the firm determines the price that would yield its target rate of return on investment. Suppose a printer manufacturer invested three million dollars and wants to earn 50% ROI:

Target return price = unit cost + desired earnings / unit sales

Desired earnings = desired return x invested capital